FG expected to spend N6.7trn on petrol subsidy payment in 2023

The federal government says it has earmarked N6.7 trillion for payment of petrol subsidy in 2023.

Zainab Ahmed, minister of finance, budget and national planning, said this Thursday at the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper (MTEF&FSP) in Abuja.

Ahmed said subsidy payment projection is based on two prevailing scenarios — business-as-usual or reform.

“Scenario 1 – the Business-as-Usual scenario: This assumes that the subsidy on PMS, estimated at N6.72 trillion for the full year 2023, will remain and be fully provided for,” she said.

“Scenario 2 – the Reform scenario: This assumes that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.”

She, however, said both scenarios have implications for net accretion to the federation account and projected deficit levels.

The Federal Government, in January, announced it was shelving the idea of removing petrol subsidy in one fell swoop. The government said it took the decision – after announcing it would remove subsidy – because of “high inflation and economic hardship”.

Lai Mohammed, minister of information and culture, said many other countries had also introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.

“When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so,” Mohammed had said.

The government plans to spend a total of N4trillion on petrol subsidy payment in 2022.